Financial Performance at a Glance: A Mixed Bag of Growth and Rising Costs

YBS International’s latest report presents a nuanced picture. On one hand, the company achieved impressive revenue growth, particularly in its Electronic Manufacturing Services (EMS) segment. On the other, it faced an increase in full-year losses, primarily due to higher operational costs. Here’s a breakdown of the key figures:

Quarterly Performance (Three months ended 31 March 2025 vs. 31 March 2024)

For the current quarter, revenue climbed by 9.1% to RM30.34 million, driven largely by robust market demand in the Electronic Manufacturing Services segment. Gross profit saw an even more significant jump of 89.9% to RM3.63 million. What’s particularly encouraging is the substantial reduction in quarterly loss before tax, which improved by 84.1% from RM5.91 million to RM0.94 million. This improvement was mainly attributed to lower share option expenses incurred during the quarter.

Full Year Performance (Twelve months ended 31 March 2025 vs. 31 March 2024)

Looking at the full financial year, revenue increased by a healthy 20.4% to RM118.63 million, while gross profit also rose by 31.9% to RM14.25 million. However, the full-year loss before tax widened by 11.5% to RM8.89 million, primarily due to an increase in staff costs. This indicates that while the company is growing its top line, managing operational expenses, especially staff-related costs, remains a key challenge for overall profitability.

Diving Deeper: Segment Performance

A closer look at the performance of YBS International’s various business segments reveals the drivers behind the overall results:

• Electronic Manufacturing Services (EMS): This segment was the standout performer, with revenue soaring by 123.7% in the current quarter and a remarkable 262.5% for the full year, driven by strong demand from both new and existing customers. This clearly highlights the growth potential and market traction in this area.
• Precision Engineering and Plastic Injection Moulding: This segment also showed positive growth, with quarterly revenue up 18.9% and full-year revenue increasing by 12.4%, benefiting from higher market demand.
• Precision Machining and Stamping: While the current quarter saw a slight decrease in revenue by 5.5%, the full-year performance was positive, with revenue growing by 12.6% due to higher market demand.
• Paper Products: This segment faced headwinds, with revenue declining by 39.0% in the current quarter and 34.9% for the full year, attributed to lower customer demand. This segment appears to be a drag on overall performance.

Financial Health and Cash Flow Dynamics

The balance sheet reflects a stronger financial position, while cash flow movements highlight strategic investments and financing activities.

Statement of Financial Position (as at 31 March 2025 vs. 31 March 2024)

Total assets increased significantly, largely driven by revaluation of land and buildings and increased property, plant and equipment. Total equity also saw a substantial rise, bolstered by share capital increases from employee share option exercises and a private placement. This led to a healthy improvement in net assets per share.

Cash Flow Statement (Twelve months ended 31 March 2025 vs. 31 March 2024)

The cash flow statement reveals a shift in operating cash flow from a positive RM10.60 million last year to a negative RM5.82 million this year. This change was primarily due to significant movements in working capital, particularly a decrease in payables and an increase in receivables. However, substantial cash inflows from financing activities, mainly from the private placement and term loans, offset the negative operating cash flow, leading to an overall net increase in cash and cash equivalents.

Strategic Outlook: Expansion, Challenges, and Mitigation

YBS International acknowledges that the business environment remains volatile and challenging. Key external factors include:

• Exchange Rate Fluctuations: Significant movements between the Malaysian Ringgit and the US Dollar could impact the Group’s performance.
• Trade War and Tariffs: The ongoing trade war and the imposition of tariffs by the United States introduce uncertainty in business and global supply chain planning.

In response, the company is actively implementing strategies to mitigate risks and seize opportunities:

• Addressing Tariffs: The Group is undertaking risk assessments, cost-saving measures, and strategic adjustments to manage the impact of new tariffs.
• Cost Efficiency: There’s a strong commitment to improving cost efficiency to strengthen market position.
• Strategic Acquisitions: YBS International has entered into an agreement to acquire 100% equity interests in four Allied Precision Technologies companies for up to USD38 million (approximately RM164 million). This strategic move aims to widen product and service offerings, expand market outreach, leverage technology, and broaden the customer base in the precision manufacturing industry. This acquisition is expected to be completed by the second half of the financial year ending 31 March 2026.
• Disposal of Non-Core Assets: The company successfully disposed of its entire stake in Edaran Precision India Private Limited, a loss-making entity, allowing it to focus resources on more profitable business segments.
• Private Placement: The completed private placement has raised funds to part-finance the Enovix project, capital expenditure for the precision machining and stamping segment, and working capital requirements.